Chapter-2
Negotiable Instruments, its Party and His Rights and Liabilities
3. Ambiguous Negotiable Instrument:
Where a Negotiable Instrument may be construed either as a Promissory Note or Bill of Exchange the
Holder may at his /her election treat it as either.
4. Rights of the Holder:
The Holder may transfer the Negotiable Instrument.
5. Negotiable Instrument Without Payment Date:
Payment of the Negotiable Instrument in which the payment date is not written shall be made on demand.
6. Difference Between Figure and Letter: In case there is difference between the figure and letter of the amount to be paid on the Negotiable Instrument, the amount written in the letter shall be the amount to be id.
7. The Additional Time Limit:
Payment of the Negotiable Instrument on which it is not written that payable on demand or at sight or on
presentment shall be on the fourth day from the date of payment.
8. Payment after the Specified Period:
Payment of the Negotiable Instrument payable on a specified day or after the specified period of presentment or after the happening of any inevitable event or after the specified period of the happening of such event shall be as mentioned in such instrument.
9. Calculation of the Date of Maturity:
While calculating the date of payment of the Negotiable Instrument to be payable after a specified period, it is calculated by excluding the day written in the Negotiable Instrument or the day of presentment for the acceptance.
10. When Day of Maturity is a Holiday:
When the day on which a Negotiable Instrument is at maturity is a Public Holiday, the instrument shall be deemed to be due on the next preceding business day.
11. Capacity of Parties:
Any person, who is capable of contracting under the prevailing law, may make, draw, accept, endorse, negotiate etc. of the Negotiable Instrument and all parties shall be liable for it. Provided that, if such act has been done by the minor, all parties accept him/her shall be liable.
12. Agent:
For the acts done by an agent, the principal who has authorized him/her to do such act shall be liable.
13. Liability of an Agent:
If an agent who signs his/her name to a Negotiable Instrument without indicating thereon that he/she signs as an
agent, or he does not intend thereby to incur personal responsibility, is liable personally to such Negotiable Instrument.
14. Liability of an Heir:
If a person who signs his/her name to a Negotiable Instrument as an heir of a deceased person is fully liable personally thereon unless he/she expressly limits his liability to the extent of the assets received by him as such.
15. Liability of Drawer:
In case the Drawer has been provided due notice of dishonour of the Bill of Exchange by the acceptor or Drawee, it shall be the duty of the Drawer to Compensate the Holder.
16. Liability of the Bank Giving Payment of the Cheque:
The Bank having sufficient funds of the Drawer in the account, properly applicable to the payment of the Cheque must pay the Cheque, and, in default of such payment must compensate the Drawer or Holder in due Course for any loss or damage caused by such default pursuant to this Act.
17. Liability of Maker of Promisory Note and Acceptor of Bill of Exchange:
The maker of a Promissory Note or the acceptor of Bill of Exchange is bound to pay the amount thereof at Maturity when the Negotiable Instrument is duly presented for the payment. In default of such payment, the maker of the Promissory Note or the acceptor of the Bill of Exchange is bound to compensate any party payable for any loss
or damage sustained by him and caused by such default.
18. Person Capable to Accept the Bill of Exchange:
(1) No person except the Drawee or Alternative Drawee of a Bill of Exchange can accept the Bill of Exchange in his responsibility.
(2) In case there are more than one Drawee in the Bill of Exchange, any one Drawee may accept the Bill of Exchange only in his/her own favour. Provided that, in case the Drawees of a Bill of Exchange who are partners or authorised, one can accept it for another.
19. Liability of Endorser:
Any person who indorses and delivers a Negotiable Instrument expressly limiting or excluding his/her own
liability, shall be responsible to every subsequent Holder except otherwise a contract is made thereto.
20. Liability of the Parties to Holder in Due Course:
Every prior party to a Negotiable Instrument is liable thereon to a Holder in due Course until the instrument is duly satisfied.
21. To be Equivalent to Principal Debtor:
The maker or Drawer of the Negotiable Instrument until acceptance, and the acceptor are in the absence of a contract to the contrary respectively liable thereon as principal debtors, and the other parties thereto are liable thereon as sureties for the maker, Drawer or acceptor, as the case may be.
22. Prior party to be Equivalent to Principal Debtor in Respect of each Subsequent Party:
As between the parties so liable as sureties, each prior party is, in the absence of a contract to the contrary, liable thereon as a principal debtor in respect of each subsequent party.
23. Liability of Surety:
Notwithstanding anything contained in the prevailing laws, the surety of Bill of Exchange cannot take stand that
only in case the realization could not be possible from the property of the principal debtor, shall be realized from his/her property, it can be directly realized from the person being a surety.
24. Discharge of Endorser’s Liability:
If the Holder without the consent of the endorser impairs the remedy against a prior party, the endorser is
discharged from Liability to the Holder.
25. Bound to be Responsible:
An Acceptor of a Bill of Exchange already indorsed is not relieved from liability by reason that such Endorsement
is forged, if he knew or had reason to believe the Endorsement to be forged when he/she accepted the bill.
26. Negotiable Instrument without Consideration:
A Negotiable Instrument made, accepted, indorsed or transferred without consideration against the prevailing law creates no obligation of payment between the parties to the transaction. If any person has transferred such Negotiable Instrument with or without Endorsement to a Holder for consideration, such Holder deriving title for him/her, may recover the amount due on such Negotiable Instrument from the transferor for consideration or any prior party thereto.
27. Duplicate to be Given:
In case the Holder who has lost the Negotiable Instrument requests for obtaining the duplicate of the lost Negotiable
Instrument the Drawee or maker of the Bill of Exchange shall have to give him/her the aforesaid duplicate by taking required security and the expenditure incurred for the preparation of the duplicate.